Amid shortage, govt likely to allow petrol stations to set their own prices

As consumers across the country face difficulties due to petrol shortage, the government is currently contemplating completely deregulating pricing and marketing of petrol. 

According to a report published in Dawn,  the government is considering doing away with uniform pricing of petrol and deregulating it in line with other petroleum products like hi-octane blending component (HOBC) which are already deregulated. 

Recently oil marketing companies (OMCs) have come under severe criticism for their alleged collusive behavior that has seen the price of HOBC, to increase to Rs148-160 per litre. 

While the government slashed petrol prices to Rs74 per litre in line with the decrease in international oil prices, no such reduction was seen in the price of HOBC. 

According to the report, the government has also decided to deregulate the Inland Freight Equalisation Margin (IFEM) that currently ensures uniform prices throughout the country. As a result, consumers that are close to ports and refineries will be able to buy petroleum products at a cheaper price that may differ anywhere from Rs1 to Rs5 depending on the transportation cost.

Earlier, on June 4, the Competition Commission of Pakistan (CCP) had taken notice of public concerns and complaints about the shortage of petroleum products in the country and had initiated an inquiry to see whether such a shortage is the result of any anti-competitive activity.

The CCP’s inquiry will determine the possibility of the existence of any anti-competitive practices causing the shortage of fuel in the country and the undertakings involved in it.

The inquiry will further examine why the impact of the reduction in the prices of oil have not resulted in the corresponding reduction in the prices of the lubricants and other oil-based products, including the prices of hi-octane, which are primarily deregulated products.

Similarly, the Oil and Gas Regulatory Authority (OGRA) had also expressed its reservations last week regarding high prices of HOBC and had asked OMC’s to set prices at reasonable levels keeping in view the interests of the consumers.